$37 million

In the January tax receipts report last week, Nebraska showed a net growth of 6.5% over the forecast put forward by the Nebraska Economic Forecasting Advisory Board (NEFAB) in October. This equates to just under $37 million in additional revenue. Fiscal year-to-date receipts are nearly on par with forecast, just 0.2% below projections, or $9.6 million. 

According to the Legislative Fiscal Office, January typically does show strong numbers in sales and use taxes because of holiday spending. Individual income taxes, on the other hand, came in about 8% below forecasts, or $17.8 million less, a trend likely to continue as the state makes its final reduction in income tax rates in 2027, when they will reduce one final time to 3.99%. 

These numbers will inform the meeting of NEFAB at the end of the month, the final time the group will update projections before the Legislature begins debate on mid-biennial adjustments to the budget. 

$400 million

When Congress passed H.R. 1, known as the One Big Beautiful Bill Act, they made a number of changes to income tax provisions. Nebraska is one of several states whose income tax code conforms automatically to the federal code, which means Nebraska will automatically see just over a $400 million revenue loss over the next 4 years unless the Legislature implements changes. There are several options for decoupling from individual provisions, but Nebraska can also adjust conformity to a static state, which would allow the Legislature to opt in to tax provisions passed at the federal level rather than accept them automatically. 

LB 857, introduced by Senator George Dungan, would change Nebraska to a static conformity state, an option many states are considering or have already adopted to mitigate revenue losses that will inevitably result in program cuts or reductions to rainy day funds. The bill would shift Nebraska from a rolling conformity state to a static conformity state that conforms to the Internal Revenue Code as it existed on January 1, 2024. 

OpenSky policy analyst Elias Pritza testified in support of the bill during a hearing in the Revenue Committee this week, sharing that static conformity is a more flexible approach than rolling and would let Nebraska be more intentional and strategic in our fiscal policy approach. When federal laws change in the future, Nebraska would be able to evaluate the pros and cons of each provision in light of our unique fiscal and economic circumstances. Pritza also offered support for LB 846 and LB 853, which would decouple Nebraska from individual provisions of H.R. 1, another option for maintaining adequate revenue for the state in future years. 

$116.8 billion

Continuing our analysis of the federal budget recently passed by Congress, OpenSky Policy Institute dug into the $116.8 billion appropriation to the Department of Health and Human Services. The final budget signed by the President was about $33 billion more than his initial request, which defunded a number of programs promoting global health, biomedical research, children’s health and safety programs and more. 

The bill restored funding to the National Institutes of Health (NIH), which had seen a 40% reduction under President Trump’s proposal. The funding included increases year-over-year in research for cancer ($128 million increase), Alzheimer’s ($100 million increase), women’s health ($30 million increase), allergy and infectious diseases ($15 million increase), diabetes ($10 million increase) and several others. In FY 2025, Nebraska institutions received over 400 different NIH grants and contracts worth a total of over $139 million, including projects related to functional genomics, cancer research, obesity research and substance use issues in rural areas. 

The budget package also rejected a 50% proposed cut to the Centers for Disease Control and Prevention (CDC), allocating $9.1 billion. The CDC has provided about $2 million in 2026 to Nebraska entities for work related to childhood immunizations, heart disease prevention, agricultural safety and HIV prevention. 

The bill also provided $7.4 billion for the Substance Abuse and Mental Health Services Administration (SAMHSA), which marked an increase of $65 million over FY 2025. The money was allocated to address opioid overdoses fueled by fentanyl, maintain access to prevention and treatment programs and to improve mental health services. Nebraska received approximately $10 million in funding from SAMHSA in FY 2025, which funded programs related to substance use disorder treatment, youth suicide prevention, tribal mental health supports and training for educators to identify mental health concerns in schools. 

Federal funding for these programs is essential as Nebraska navigates a $472 million budget shortfall and lacks the means to recover any terminated program funding from the federal government.